Financial recruiters feel squeeze

Sunday Business Post - Recruitment Section - Dec 21 2008

The recruitment sector hasn't escaped the recession's clutches, with a grim 2009 lying in wait, writes Dermot Corrigan.

The financial crisis is forcing some recruiters targeting the market out of business, as competitors vie for a slice of a shrinking market. According to Anne Keys, director of financial recruiter IFSC Panel, it is a case of "survival of the fittest" for financial recruiters navigating a turbulent market that shows no signs of stabilising.

"There will be fewer recruitment firms in Ireland by this time next year," said Keys. "There are fewer financial services jobs to fill at the moment so there is more competition for roles. We are certainly losing some of our competitors, and others are laying off staff, particularly those who focused on junior level roles. ”

Risk management
Despite this, ongoing developments in the market have created demand for certain niche skills. One prominent example is risk - now a major concern for employers concerned with fraud and security issues in the wake of the Bernard Madoff debacle.

“Operational risk, market risk and credit risk are popular as companies are looking to see where they are at and what the internal and external risks in the market at the moment are,” said Keys.

Brian Murphy, managing director, Ireland, Premier Group, said that the number of compliance roles on offer in the Irish banking sector, and wider financial services market, would grow in the years ahead.

"I would suggest there will be a lot of procedural roles brought into the banking sector,” he said. “That particular niche area within banking and financial services will be very busy. Sarbanes-Oxley came to prominence after the Enron scandal, and for the next number of years you could not get enough of them.”

Recruitment Industry
Shay Dalton, managing director, Lincoln Financial Search & Selection, said that the recruitment industry was less able to withstand economic upheaval than some other sectors.

"Recruitment companies really lead with their chin in recessionary times and they can be badly hit," said Dalton. "It depends really on how well you are established in your market. Recent entrants into the market will suffer and possibly mid-tier firms, who grew a lot over the last three to five years, may have to scale back a lot.”

The downturn has hit recruiters heavily invested in the financial market harder than those with a broader focus, said Murphy.

"The financial services recruitment companies would probably have had it a lot harder than the general recruiters," he said. "If they are over-dependent on a small number of big clients who stop hiring, then it becomes difficult."

Keys said that some employers in financial services had opted to exclude recruitment agencies from the hiring process altogether, in an effort to cut costs, particularly for low-end roles.

“A lot of clients are going are going directly for junior roles," said Keys. "It is a big thing that we have seen. They use the recruitment firm more for middle to senior end.”

Quiet Christmas
Recruitment activity typically dies down in the run-up to Christmas but, according to Keys, the seasonal lull had a noticeably longer lead-in this year.

“Things went quiet this year quicker than any other year," she said. "Normally it gets quieter in December, but from the end of October onwards we have seen clients putting recruitment on hold until they see which way the market goes in the new year.”

“The financial services employers who have been hit harder by the downturn are now paying the price and have had to let people go," she said. "Some clients are going over the radar, but some are under the radar, depending on the number of people they are looking to make redundant.”

Murphy said that hiring freezes were holding sway across the banking sector.

"An awful lot of our customers in the banking sector would have hiring freezes in place," he said. "Anything related to the construction sector, such as mortgaging broking, professional lending and similar types of roles, are very quiet.”

Specialist roles
Despite the downturn in the financial services sector, Keys said that there were still opportunities for candidates with specialised skills.

“It is not that it is completely dead," she said. "There are some roles available, but just less of them. Some banks are looking at contract work, and mainly on the finance side. Contract accounting is definitely busier, but that tends to be the case towards the end of the year anyway.”

Keys said there were job opportunities in the financial services sector.

“A number of both domestic and overseas insurance companies are looking to recruit head of compliance type roles at the moment,” she said.

Transferable skills
Dalton said that many individuals attracted to the financial services sector during a period of sustained growth in recent years were now opting to leave.

"The financial services attracted top talent over the past ten years," he said. “There are currently options open, especially for accountants, within the commerce and industry sector. The transferable skills include traditional financial reporting, internal audit, risk and compliance, core analytical skills as well as areas such as taxation and corporate finance."

Dalton said some accountancy practices were keen to take on candidates with experience in the financial services sector.

"There is a trend for candidates who trained in practice, and who subsequently went into financial services and industry, to go back into practice," he said. "The skills they gain outside of practice complements the advisory experience they developed in practice."

Some candidates with niche skillsets find it more difficult to transfer to other sectors, said Keys.

“A lot of areas in financial services are quite niche, particularly in banking, treasury, fund accounting et cetera,” she said. “It is quite difficult to transfer that kind of skillset into another area.”

supply of candidates
Keys said that the difficulties faced by companies in the Irish financial services sector meant that there was a surplus of good quality candidates on the market heading into 2009.

“We are finding that there are way more candidates available immediately," she said. "Candidates who have either been made redundant, or their contract has finished and they have not been offered a new one.”

Dalton said that individuals in employment were less likely to move to a new employer, given the current uncertainty in the market.

"In many cases, financial services professionals are staying are remaining with their employers, rather than voluntarily enter a turbulent job market," he said.

Keys said that a “huge change” in the professional mindset of many candidates.

“Previously, most candidates who were currently working would always have been looking for other positions,” she said. “The only people currently actively looking are those who might be unsure of their current role within the company.”

According to Keys, a move overseas is on the cards for some candidates.

“Some may look to go out of Europe to locations that are up and coming, and where their skillset is in demand, such as Dubai," she said. "It is mainly banking skills that are required there at the moment. India is a place where there is lots of activity happening, but I do not see a rush of Irish people going over there.”

Salary trends
Keys said that the salaries offered for some finance roles had dropped significantly in recent months.

“Some candidates, at senior and executive level, who are currently available, are coming down maybe €20,000 from what they were on previously," she said. “I have not seen roles that were at €40,000 drop down to €30,000 but an employer might pay around €5,000 less than they might have done.”

Candidates who are out of work, when searching for a job, have little scope to negotiate with potential employers in the current market, according to Keys.

“Clients are now able to say ‘look, this is what I am paying’ and if the candidate is willing to work on that basis it will go forward,” she said. “But employers will not be matching expectations or past or current candidate salaries.”

Year ahead
Dalton said bonus payments would take a hit in the New Year.

"Many bonuses within financial services are paid in January and in many cases, these will not be paid or will be less than 2007," he said.

Keys said:

“It is very hard to predict what way the market are going. Most of the media are saying it will be 2010 (before it picks up), and that 2009 will be a difficult year. The expectation is that Q1 and Q2 will be difficult, but that there will be some pick up in the third and fourth quarters of the year. It will be a tough year, but there will still be roles to fill.”